“We have expected that RBI to remain on hold with a bit hawkish tone. As expected RBI has marginally raised its forecast of CPI inflation range from 4.20% – 4.60% to 4.3% – 4.7%, but retained its neutral stance.

This helped the 10 year yield to remain in the range of 7.00% to 7.10% for the time being. In future Yields will react to movement of oil prices and additional government borrowing on account of shortfall in revenue.

We expect the 10 year yield to remain elevated on account of demand supply mismatch. On Liquidity RBI will try to maintain the overnight Rate at Repo Rate i.e at 6.00% for the time being through various liquidity measures till the past rate cuts are passed on by Banks.

On GDP front the last quarter data suggested a mild recovery from 5.6% to 6.3% on account of higher growth in Manufacturing. We expect the GDP to recover slowly on account of GST uncertainty and higher oil prices”.